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Florida Retirement System Reform

On Tuesday, February 18th the Senate Committee for Community Affairs passed by a 5-4 vote a Proposed Committee Bill (SB7046) that would close the Defined Benefit Plan and create a Cash-Balance Plan for FRS employees hired after July 1st 2015. A Cash-Balance retirement plan would guarantee a minimum retirement benefit for its members. Cash-Balance accounts would be funded by employee and employer contributions based on a percentage of monthly compensation, a guaranteed 2 percent interest on the account balance and 75 percent of any investment returns over 2 percent. Employees hired after July 1st, 2015 will have the choice of enrolling into the Defined Contribution Plan (Investment Plan) or Cash-Balance Plan. Special Risk employees (i.e. Firefighters, Sheriffs etc.) will still be eligible to enroll in the Defined Benefit Plan. Current employees enrolled in the pension or investment plans will be eligible to move to the cash-balance plan if they choose to. Employees enrolled in the Cash-Balance plan are vested after completing five years of service. Upon retirement, employees may choose to receive their retirement benefits as an annuity or as a lump-sum distribution. No actuarial analysis is available yet on this plan. The House has still not signaled what reform package they will put forth this year as they too are waiting on actuarial analyses on a Cash-Balance Plan and a Consolidated/Hybrid Plan. FAC will continue to monitor these efforts closely.